Thought Process on My Analysis

The below conversation is based on the chart shown.  It's between me and one of our traders.  Sean had a losing trade when he shorted AUD.  My purpose of posting it (with Sean's permission) is to show my thought process when I analyze.

Eric Says (5:16 PM):
 ok.. lets stop bitching and see what we can do next
 u want to see AUDUSD?
 lets rationalize it
sean Says (5:16 PM):
 ok
Eric Says (5:17 PM):
 ok, u ready?
sean Says (5:17 PM):
 ok
Eric Says (5:18 PM):
 AUD has come down quite a bit, do we know why it stopped here?
sean Says (5:18 PM):
 yeap
Eric Says (5:18 PM):
 why?
sean Says (5:19 PM):
 it is t 50% fibo
Eric Says (5:20 PM):
 good... but why did u choose the low for that fibo?
sean Says (5:21 PM):
 bec...it is a new trend from the most recent consolidation
Eric Says (5:21 PM):
 ok... another reason, it is Oct low
sean Says (5:21 PM):
 ok
Eric Says (5:21 PM):
 many traders look at such figures
sean Says (5:22 PM):
 ok
Eric Says (5:22 PM):
 ok now, if u draw down TL over the past few days, what do u notice?
sean Says (5:23 PM):
 broke the initial channel...very bearish
Eric Says (5:23 PM):
 how about the slope?
sean Says (5:23 PM):
 steep
Eric Says (5:24 PM):
 ok... so if we look at each impulse (based on the TL), we notice that the retracement is around 50 to 61.8%
sean Says (5:24 PM):
 ok...means that we should expect repetition ...
Eric Says (5:25 PM):
 I think so... I am trying to rationalize it
Sean Says (5:25 PM):
 i think so too
Eric Says (5:25 PM):
 and you shorted below the 23% fib-r of your recent impluse wave
 so, in this case, a unsound decision has been made
sean Says (5:26 PM):
 ok...
 i shorted below 38.2% ....but never mind...its the same
Eric Says (5:26 PM):
 that's because u draw a different fibo
sean Says (5:26 PM):
 impluse by impluse
Eric Says (5:27 PM):
 if I were u, I would have draw the fibo from yesterday's high to low
 see, this point can also affect your decision
sean Says (5:28 PM):
 ok
Eric Says (5:28 PM):
 but in any case, a 50% retracement is more healthy and that is what we should be looking for, unless u are in a aggressive mode
sean Says (5:28 PM):
 ok
Eric Says (5:28 PM):
 which also means, u should have some winning buffer to allow u to do so
Eric Says (5:29 PM):
 but since you are on losing streak, then its a no-no
sean Says (5:29 PM):
 hmmm.ok
Eric Says (5:29 PM):
 ok, let's look at new opportunity
 there are 2 possibilities now
 1) reversal
 2) retracement
sean Says (5:29 PM):
 ok
Eric Says (5:30 PM):
 let's look at 1)
 for AUD, I see a round bottom
 if a handle forms later, then a reversal is likely
sean Says (5:31 PM):
 cannot see round bottom....TF?
Eric Says (5:31 PM):
 H1
 sorry, to look for setup, we always focus on H1
 H4 is roadmap
sean Says (5:31 PM):
 ok
Eric Says (5:31 PM):
 back to the basics
 :-)
Eric Says (5:32 PM):
 but this reversal usually won't be easy
 so if we want to trade, we need to manage and not try to ride it
sean Says (5:33 PM):
 ok
Eric Says (5:33 PM):
 let's look at 2)
 If I assume it’s a retracement, I look for Gartley
 where the low point is my A
 I would wait for a lower high to form first
Eric Says (5:34 PM):
 and that's my B
  if B forms around 50% and retrace and form C, you might want to consider long and play the CD leg so now, if I assume D is 61.8 (0.9104) and if I can get a price at around 0.9060, I've got 40pips, i.e. I can try
 TP1 = 61.8%
sean Says (5:38 PM):
 ok
Eric Says (5:38 PM):
 so if it turns out to be a reversal, I still have 1/2 position to ride and add back later
Eric Says (5:40 PM):
 or when there is a signal to short, my short price potentially would be 20pips above my previous entry, so close the long and open new short
 I would have an extra buffer for this short trade
sean Says (5:40 PM):
 ic
Eric Says (5:40 PM):
 can "hear" my thought process?
sean Says (5:40 PM):
can